November
28, 2002

Provided
Village service for more than 30 yearsDayton
to stop collecting taxes

The Village must find a new way to collect income tax revenue now that
the City of Dayton has announced that it will no longer provide tax collection
services to other municipalities.

The decision by Dayton, which has collected income taxes for the Village
for more than 30 years, leaves the Village scrambling to find an alternative
solution in less than three months.

Nearly two weeks ago, the Village learned of Daytons decision. Village
Manager Rob Hillard, who said he did not anticipate this situation, informed
Village Council of the news at its meeting Nov. 18. Council president
Tony Arnett called the task of finding a new way to collect income taxes
the Villages No. 1 priority.

Though the Village levies a 1 percent income tax on people who work in
Yellow Springs, and in some cases, who live here, for years it has paid
the City of Dayton to collect the tax. The Village pays Dayton a 3.33
percent collection fee for the service. In 2000, the Village paid $54,000.

Dayton will discontinue its collection service on Feb. 14.

Dayton officials decided to stop the service because of budgetary concerns,
which have affected the citys staffing levels, said Michael Voelkl,
the citys manager of revenue and taxation. We do not have
the staff anymore to meet Daytons agreement with the Village
and other communities, he said.

Recently, Dayton reorganized its tax and finance departments, making the
tax department about seven positions smaller than it was about two years
ago, Voelkl said.

Dayton also collects taxes for Brookville, Cedarville, Englewood, Phillipsburg
and West Milton.

In its 2002 Village budget, the Village expected to receive $1.4 million
in income taxes, which is used to fund activities in the Village general
fund. Income taxes account for 64 percent of the funds revenue.
The general fund includes the Village administrative offices, Council,
the mayors office, the parks department, Gaunt Park Pool and the
streets department.

At this time, the Village is considering three options:

 Collect income taxes in-house

 Hire another municipality to collect the tax

 Hire a private company to do the job

In an interview last Friday, Hillard said right now he would prefer to
work with another municipality that, like Dayton, provides a tax-collection
service to other jurisdictions. Hillard said he is looking for a
known commodity, one thats done it before and has experience
collecting taxes.

He said he has been discussing this possibility with other municipalities,
but declined to say who they were. Voelkl said Brookville and Englewood
have contracted with Vandalia.

To collect its income tax revenue, the Village would have to create a
tax collecting system. To do this in less than three months would be a
very challenging endeavor, Hillard said.

Hillard said his biggest concern is to help make the transition from one
tax-collecting system to another as smooth as possible. It is very likely
that some tax revenue could be lost during this period, Village officials
say.

Making this situation more urgent is the fact that the Village must find
a solution by the middle of February, during the 2002 tax season. During
last weeks Council meeting, Arnett said, The most appalling
aspect of this is the timing.

In an interview Monday, Voelkl said, there is never a good time
to make this decision. Still, he added, tax and withholding forms,
which will be available after the first of the year, will now only have
to be sent to individuals and businesses once. If Dayton had discontinued
the service in the summer, a second set of forms would have had to have
been sent out, he said.

Six months from now would be a bad time, Voelkl said.

According to Hillard, the Village has 1,427 individual tax accounts; 328
withholding accounts, which are businesses that withhold individual taxes;
194 corporate accounts; and 24 partnerships.